Mike Lindenberg

Mike Linenberg inquired about the status of a proposed Brazilian law mandating free checked bags and seat selection, its applicability to domestic and international flights, and its legislative progress. He also asked about LATAM's long-term capital allocation strategy, specifically regarding the regularity of share buybacks.

Answer

CEO Roberto Alvo confirmed the Brazilian lower chamber passed a law for free checked bags and seat selection on domestic and international flights, awaiting Senate review and potential presidential veto, which LATAM opposes due to potential fare increases. CFO Ricardo Bottas stated that business growth is the priority for capital allocation, noting a balanced mix of initiatives in 2025, with future buybacks being a board decision.

Mike Linenberg inquired about the status of the proposed Brazilian law to mandate free checked bags and seat selection, its scope (domestic vs. international), and its progression through the legislative process. He also asked about LATAM's long-term capital allocation strategy, specifically regarding the regularity of share buybacks versus opportunistic initiatives.

Answer

Roberto Alvo, CEO of LATAM Airlines Group, confirmed the Brazilian lower chamber passed a law for free bags and seat selection (domestic and international), which still needs Senate approval and potential presidential veto. He expressed LATAM's opposition due to potential fare increases. Regarding capital allocation, Mr. Alvo stated business growth is the priority, and while a balanced mix of initiatives has been pursued, future decisions on buybacks and dividends are board-level and depend on results and market opportunities.

Mike Linenberg inquired about specific statistics on recent initiatives, including the inflection in connections, entertainment outperforming passengers, and improved load factor. He also asked for details on the basic economy rollout, particularly the buy-up rates and how the proportion of tickets sold in the bottom fare bucket has changed.

Answer

COO Andrew Watterson confirmed positive load factor inflection post-summer, attributing it to enhanced connectivity, third-party channels, and the basic fare rollout. He noted a mid-single-digit increase in optional buy-ups, with a larger step-up expected in Q1 2026. CFO Tom Doxey and CEO Bob Jordan reiterated that all initiatives are on track, with early bookings for assigned seating showing encouraging trends and a four-point higher Net Promoter Score on reconfigured aircraft, even before assigned seating officially launches.

Mike Lindenberg of Deutsche Bank asked about United's upcoming decision on the future shape and size of its wide-body fleet, specifically how the historical pain points and costs associated with introducing additional aircraft types have evolved or if they remain prohibitively expensive.

Answer

EVP and CFO Mike Leskinen acknowledged the complexity costs of additional aircraft types, stating this hasn't changed for United. He explained that the decision involves weighing these costs against different aircraft capabilities (range, gauge), price, and expected maintenance costs to optimize long-term profits.

Mike Lindenberg asked about the financial impact of past government shutdowns on Delta, specifically recalling the 2018-2019 period and how it started to affect the company. He also questioned what has changed to make non-hub flying in focused cities like Boston profitable for Delta.

Answer

President Glen Hauenstein recalled that the previous government shutdown cost Delta about $1 million a day, which is now less than $1 million a day due to factors like reduced DCA travel. He explained that focused cities are profitable because they enhance Delta's relevance, allowing the acquisition of SkyMiles members and co-brand cardholders, which are crucial for the loyalty ecosystem, sometimes exceeding hub profitability.

Mike Lindenberg asked about the impact of the current government shutdown, recalling the 2018/2019 shutdown and its financial effect on Delta. He also inquired about Delta's focus on Boston, a non-hub city, and what has changed to make such flying profitable, historically being lower margin.

Answer

President Glen Hauenstein recalled the previous shutdown's impact was about $1 million a day, but the current impact is less than that, partly because DCA travel was already down. He explained that Delta's strategy for focused cities like Boston (and Austin) is driven by customer relevance, which enables the acquisition of SkyMiles members and co-brand cards, creating a profitable ecosystem. These focused cities have proven quite profitable, sometimes exceeding hubs.

Inquired about the financing for new 2024 aircraft deliveries and the drivers behind the forecast for positive operating cash flow starting in March.

Answer

All 2024 aircraft deliveries are fully financed via sale-leasebacks or direct leases. The positive cash flow forecast is driven by an expected domestic market recovery, seasonal strength, and internal cost management initiatives, leading to expected positive margins in Q2, Q3, and Q4.